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Florida, hospitals sue Tenet over Medicare billing

The issue is how the company handled outlier reimbursements, something that the hospital chain has gotten into hot water over before.

By Katherine Vogt — Posted March 21, 2005

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Once again, Tenet Healthcare Corp. is under the gun for how its hospitals bill Medicare for outlier payments.

This time the Dallas-based hospital chain faces a civil racketeering lawsuit brought by Florida's attorney general and 13 hospital systems who claim that Tenet falsely inflated its prices to collect more than $1 billion from a shared Medicare fund for outlier reimbursements.

The action, announced on March 2, comes little more than two years after Tenet voluntarily changed its Medicare outlier billing policy in the wake of a federal investigation into its practices. Still, the federal probe has remained unresolved, a Tenet spokesman said.

The lawsuit alleges that Tenet artificially boosted its charges so it could collect more money than it deserved from a Medicare fund known as the Outlier Pool, which hospitals share to obtain reimbursements for expensive services. It also claims that Tenet prevented Florida community hospitals from collecting millions of dollars in reimbursements that they would have been otherwise due to them.

In a written statement, Florida Attorney General Charlie Crist said that "Tenet gamed the system to enhance its profit margin at the expense of public hospitals."

"When hospitals lose," he added, "both the taxpayers who support them and the patients who depend on them are victims."

In addition to racketeering charges, Tenet is also accused of unjust enrichment and violation of Florida's unfair trade law.

The lawsuit, filed in U.S. District Court in Miami, seeks damages estimated to be in the millions of dollars, as well as fees and other costs associated with the case.

Tenet's general counsel, E. Peter Urbanowicz, said in a written statement that the allegations were "unwarranted."

"Frankly, we are surprised that the plaintiffs would bring this suit more than two years after Tenet voluntarily reduced the amount of outlier payments we received from the Medicare program and adopted stringent new policies governing such payments well before federal regulators promulgated such policies for the entire hospital industry," he said.

Tenet changed its outlier billing policy in January 2003, just days before the Dept. of Justice filed a lawsuit accusing the hospital chain of overbilling Medicare. The company saw a drop in revenues following the policy change, which it said would decrease outlier payments to its hospitals from about $65 million per month to about $8 million per month.

Tenet owns about 78 hospitals nationwide, including 15 in southern Florida.

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